Retirement assets are making a comeback

Retirement assets at the end of 2013 were the highest on record, a strong indication that many savers have seen their investment accounts bounce back from the financial crisis of 2008 when the stock market fell so hard it lost nearly half its value.

Following a strong equity market in 2013, retirement assets at the end of the year had grown to $19 trillion compared to $16.3 trillion at the end of 2012, according to the Retirement Market Insights Report 2014 prepared by Chicago-based Spectrem Group.

"The total retirement assets now are greater than they were before the recession," said George Walper Jr., president of Spectrem Group. "All of the accounts have grown primarily due to record stock markets last year.

"But people also are continuing to make contributions to their retirement accounts. More people are working now — due to lower unemployment — and more employers also have restarted matching 401(k) plan contributions. All these things are driven by the economy as a whole being stronger today versus 2009."

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In 2013, there was $7.8 trillion in company 401(k) retirement plans; $6.2 trillion invested in Individual Retirement Accounts; $3.9 trillion in public sector retirement accounts; and $985.4 billion in 403(b) retirement plans, according to Spectrem Group.

Walper said the fact that these strong results were seen across all sectors of the market bodes well for the future retirement security of American workers.

As of Dec. 2, 2008, retirement accounts had lost $2.8 trillion, or 32 percent of their value. The stock market itself lost 47 percent of its value during that same time frame, a roughly $11 trillion drop.

While the increased assets in retirement accounts is good news in general, the consumer advocate for the Certified Financial Planner Board in Washington, D.C., said there are a lot of devils in the details.

"This doesn't necessarily mean people are out of the woods with respect to retirement savings," said Eleanor Blayney. "There are segments of individuals who may still be underfunded for retirement.

"Of particular concern are baby boomers. They are closer to retirement than most of the population, and we know they have not saved enough."

Thomas Mackell Jr., former chairman of the Federal Reserve Bank in Richmond, Va., said he believes the record high asset figures may be deceiving.

Most Americans are still woefully unprepared for retirement. The average 401(k) balance for 50 percent of Americans close to retirement — north of age 50 — is $27,000. He said the average 401(k) balance for all ages in the U.S. is $84,000.

Ideally, individuals should have enough money saved to live 20 years or more in retirement — based on their own standard of living — with an annual withdrawal rate of about 4 percent.

"It may be true that those funds have done well because of the rise in the stock market in 2013," he said. "However, those people who have 401(k) plans are not professional managers. They have not gone to the Wharton School of Business, and their funds have not done as well. They tend to be more conservative. They put their money in bonds, and bonds have performed poorly."

"Retirement income security is not widespread," Mackell said. "So many individuals, 36 percent of the U.S. population, don't have any money saved for retirement."